UPDATE 1-Valero unlikely to sell Aruba refinery - sources
By Erwin Seba
HOUSTON, June 4 (Reuters) - Valero Energy Corp (VLO.N) is unlikely to find a buyer for its shuttered 325,000 barrel per day refinery in Aruba after two and a half years of trying, according to sources familiar with the matter.
San Antonio-based Valero is pursuing talks on forming a joint-venture with Latin American national oil companies in lieu of a sale, the sources said.
"They say they are looking for a buyer, but they are only talking about joint-venture partners," one of the sources said.
Even if unable to find a joint-venture partner, Valero would be able to operate the Aruba refinery without losing money, assuming current economic conditions continue, according to the sources.
Valero said on Thursday it would soon begin a 90-day overhaul of production units at the Aruba refinery, which was shuttered in July 2009, to prepare for a restart.
Valero spokesman Bill Day said the company was prepared to continue running the refinery alone.
"Valero continues to explore all options for the Aruba refinery, and an operating refinery may be more attractive to a potential buyer than a shutdown one," Day said.
The Aruba refinery, which cannot make finished refined products, has been called unattractive by refinery brokers because it would require an investment of hundreds of millions of dollars for it to make finished refined products like gasoline or diesel fuel.
Prior to shutting the refinery as the recession crushed U.S. consumer demand for motor fuels, Valero used Aruba to make feedstocks that were sent to Gulf Coast and East Coast refineries to be made into finished fuels.
PDVSA, PETROBRAS AMONG POSSIBLE PARTNERS
Among the potential joint-venture partners are Venezuela's state-owned oil company Petroleos de Venezuela SA, or PDVSA, Petrobras (PETR4.SA)(PBR.N) of Brazil and Pacific Rubiales (PRE.TO) of Colombia, the sources said.
Aruba's government, which recently approved the settlement of a tax dispute with Valero, has identified those companies as having engaged in talks to buy the plant.
One company missing from the joint-venture partner list was PetroChina (0857.HK)(601857.SS), which was touted as a potential buyer of the refinery.
"They're out of it," one of the sources said about PetroChina.
Petrobras came close to a purchase of the refinery, but the deal fell through in 2008 after a fire at the plant.
Valero would not lose money if it simply restarted the refinery, assuming motor fuel demand continues to recover in the United States.
"They think they can break even," one of the sources said.
Valero does plan to cut back on salaried employees and contractors at the refinery following the restart, the sources said.
The refinery's hourly workers are covered by a contract with the United Steelworkers union.
Valero is the largest independent refiner in the United States. (